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Ailing JAL to tie up with rival

TOKYO, Aug 21 – Japan Airlines announced on Friday that it aimed to merge its freight business with that of rival Nippon Cargo Airlines in response to a sharp drop in demand during the economic downturn.

JAL, which lost one billion dollars in the three months to June, said it had agreed to start negotiations with Nippon Yusen Kaisha, which owns the rival cargo firm, with a view to joining forces by April 1, 2010.

"Following the collapse of the economy in the United States last autumn, the financial crisis that spread worldwide caused demand for air cargo transport to fall drastically and market situations to worsen," JAL said.

A merger of the two largest cargo operators in Japan should enable them to make a profit, JAL said.

The two airlines have already started code-sharing for cargo flights.

"Further consolidation is expected to bring about more benefits such as allowing both companies to significantly reduce cost and to fortify their technical expertise," JAL said in a statement.

JAL, Asia\’s biggest carrier, earlier this month announced drastic cuts to its flight services as it braces for a second straight year in the red.

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